Net sales for the second quarter were $65.7 million, a 12.0% increase from $58.7 million in the same period last year. Sales growth was driven by an increase in sales of VPI transformers to one of our OEM customers and a substantial increase in the sales of switchgears and unit substations to our customers in China.

In the second quarter, China sales increased 10.2% year-over-year to $55.8 million, or 84.9% of net sales, compared to $50.6 million, or 86.3% of net sales, in the same period last year. Sales outside of China for the quarter increased 23.2% year-over-year to $9.9 million, or 15.1% of net sales, compared to $8.0 million, or 13.7% of net sales for the same period last year.

Sales to OEM customers increased 5.0% year-over-year to $11.8 million, or 17.9% of net sales, compared to $11.2 million, or 19.1% of net sales in the same period last year.

Gross profit in the second quarter increased 7.9% year over year to $22.0 million from $20.4 million in the same period last year. Second quarter 2014 gross profit margin was 33.5%, compared to 34.8% in the prior year period. Gross margin for the quarter was within our expectations. The decrease from the same period last year was due to an increased mix of sales of switchgear and unit substation products which typically carry a lower margin, but offer higher unit pricing and present substantially larger addressable markets to Jinpan.

Selling and administrative expenses in the second quarter were $15.6 million, or 23.7% of net sales, compared to $15.0 million, or 25.5% of net sales in the same period last year. Selling and administrative expenses increased slightly from the same period last year due to higher sales volume, increased costs associated with the establishment of the Guilin plant, and increased research and development expenses.

Operating income for the second quarter increased 18.9% to $6.4 million, or 9.8% of net sales, from $5.4 million, or 9.2% of net sales, in the same period last year.

Net income for the second quarter increased 20.6% to $5.3 million, or $0.32 per diluted share, compared to $4.4 million, or $0.26 per diluted share, in the same period last year. Second quarter net income, as a percentage of net sales, was 8.0% compared to 7.5% in the same period last year.

Mr. Zhiyuan Li, Chief Executive Officer of Jinpan International, stated, "We are pleased with our second quarter results, which reflected a continuation of the positive trends we have seen in previous quarters. Our team continued the strong execution of our strategic plan and produced encouraging results. Our expanded production capacity and productivity improvements drove double-digit revenue growth for the fourth consecutive quarter, with quarterly operating margins approaching double-digits.

"Sales to our OEM customers continued to increase and diversify. During the quarter, we supplied dry type transformers to our OEM customers for wide range of applications. Our strategy remains focused on expanding our business with the six OEM customers with whom we have qualified.

"Within China, we generated double-digit sales growth, despite mixed end markets. We remain well-positioned within key market segments, benefitting from strong growth in renewable energy and rail transportation and stable demand from the industrial sector, which offset weakness within the residential construction markets. We believe our product quality, manufacturing capacity, and cost structure enable us to compete in a slower-growth environment and capture market share over time. At the end of June, our backlog equaled $119 million, up 0.8% from the first quarter of 2014."

Balance Sheet

As of June 30, 2014, the Company had $18.8 million in cash and cash equivalents, restricted cash, and short term investments, compared to $30.8 million as of December 31, 2013. The Company's accounts receivable on June 30, 2014 totaled $150.9 million, compared to $144.6 million as of December 31, 2013. Total bank loans outstanding at June 30, 2014 were $41.7 million, compared to $43.1 million at December 31, 2013.

Financial Outlook

The Company reiterates its guidance for the full year 2014, projecting revenue and earnings growth of approximately 10% to 15% compared to 2013. Net sales are expected to be in the range of $248 million to $260 million and net income is expected to be in the range of $18.2 million to $19.1 million, or $1.09 to $1.14 per share.

Conference Call Information

Jinpan's management will host a conference call and webcast on Tuesday, August 12, 2014, at 8:30 a.m. Eastern Time. Listeners may access the call by dialing 1-888-791-4321 (toll free) or 1-913-312-0951 (international). A webcast will also be available via http://public.viavid.com, with event ID: 110498. A replay of the call will be available through August 19, 2014, by dialing 1-877-870-5517, access code 9776188.

ABOUT JINPAN INTERNATIONAL

Jinpan International Limited (NASDAQ: JST) designs, manufactures, and markets electrical control and distribution equipment used in demanding industrial applications, utility projects, renewable energy installations, and infrastructure projects. Major products include cast resin transformers, VPI transformers and reactors, switchgears, and unit substations. Jinpan serves a wide range of customers in China and reaches international markets as a qualified supplier to leading global industrial electrical equipment manufacturers. Jinpan's four manufacturing facilities in China are located in the cities of Haikou, Wuhan, Shanghai and Guilin. The Company was founded in 1993. Its principal executive offices are located in Haikou, Hainan, China and its United States office is based in Carlstadt, New Jersey. For more information, visit www.jinpaninternational.com.

Safe Harbor Regarding Forward Looking Statements

This press release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's current expectations and observations and involve known and unknown risks, and uncertainties or other factors not under the Company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors are listed from time-to-time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 20-F for the period ended December 31, 2013 and our subsequent reports on Form 6-K. Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

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